Third Issue Of WTPI Shows No Signs Of Price Recovery

Wind turbine contract prices signed in 2010 for delivery in the second half of the year (H1 2010) and the first half of 2011 (H1 2011) continue to point to a significant decline compared to 2008 prices. This reduction amounts to about 15%, according to the third issue of the Wind Turbine Price Index (WTPI), published this week by Bloomberg New Energy Finance.

Bloomberg New Energy Finance analysis shows that turbine prices peaked at 1.22 million euros for contracts signed in 2008 for delivery in the first half of 2009.

Nevertheless, current oversupply in the global market – mainly due to financing issues for wind projects – has led to a sharp fall in pricing for contracts signed this year for delivery in H2 2010 and H1 2011, with average prices of 1.04 million euros. The WTPI shows no signs of a price recovery in the near future, according to the analysis.

The WTPI, published twice a year, is based on confidential data provided by 22 turbine buyers, which include utilities, independent power producers and project developers, as well as financial investors.

The sample includes nearly 110 individual contracts totaling 5.6 GW of contracted capacity – or 25% of the annual wind market – the most authoritative reference for turbine pricing in the industry. The sample also includes contracts in 24 different markets, with 14 manufacturers represented in the analysis.

‘Expectations for turbine prices have never been so low, and the current market oversupply will continue for quite a while longer,’ says William Young, manager of the Bloomberg New Energy Finance's wind insight service. ‘That may not be great for wind turbine manufacturers, but the good news for the sector is that it will improve the competitiveness of wind with gas, coal and nuclear as a means of generating electricity.’

Key findings of the analysis include the following:

– Markets with exposure to electricity prices display the largest decrease – especially in the U.S., where power purchase agreement prices have softened and those agreements are hard to secure;

– Full-service operation and maintenance (O&M) prices displayed a slight decrease, averaging 29,000 euros to 35,000 euros per year for the first five years of operation, down from 34,000 euros to 42,000 euros. In addition, an increasing number of contracts are being agreed upon for 15 years of O&M, as manufacturers attempt to capture these revenues and make more competitive offerings; and

– Procurement officers for some of the main turbine buyers expect a further decrease in pricing of 4% this year and 1% in and 2011.

SOURCE: Bloomberg New Energy Finance